All other characteristics being equal, securities with ____ liquidity would have to offer a ____ yield to be preferred.
A)lower; higher
B)higher; higher
C)lower; lower
D)None of these are correct.

Question

Quizplus · Accepted Answer

Securities with lower liquidity are less desirable because they are harder to buy or sell quickly without affecting the price. Therefore, they must offer a higher yield to compensate investors for the added risk of lower liquidity.

All Other Characteristics Being Equal, Securities with ____ Liquidity Would